The article discusses the Florida Fintech and Crypto Sandbox Program established by the Financial Technology Sandbox law, which became effective on January 1, 2021. The Florida FinTech Sandbox establishes a two-year licensing program which can be extended for one additional year. The Sandbox license provides an exemption and waiver of select provisions of Florida’s Money Services Business Act (FMSBA) and Florida’s Consumer Finance Act (FCFA) for companies wishing to test an Innovative Financial Product (IFP). Innovative Financial Product licensees are still subject to those provisions of FCFA and FMSBA not specifically excluded under the FinTech Sandbox Program and are not permitted to either engage in or advertise as being in the business of cashing payment instruments or exchanging foreign currency.
The FinTech Sandbox license permits creation and exchange of all forms of digital currency, including cryptocurrency in the state of Florida for any business that uses or contracts to use an Innovative Financial Product (IFP). An IFP is defined as any new or emerging technology, or new uses of existing technology, which provide a financial product, service, business model, or delivery mechanism that is not known to have a comparable offering in the state. In this case, a financial product or service is defined as a product or service related to a consumer finance loan or a money transmitter or payment instrument seller.
The FinTech Sandbox license is issued by the State of Florida Office of Financial Regulation (OFR). The OFR can approve a FinTech Sandbox license only if one or more of the Florida laws currently prevent an innovative financial product or service from being made available to consumers in the state.
Requirements to meet to apply for Florida’s Fintech Sandbox Program
In order to apply for the Florida Fintech and Crypto Sandbox Program, a business must follow the application process and meet the requirements below:
- A business must identify each specific law and regulation from the MSBA or FCFA that currently prevents its innovative product or service from being available to Florida consumers and provide the reasons why, as part of the Sandbox license application.
- Provide information about the business. An applicant for a Sandbox license must identify the business entity, the person representing the business, and all control persons, including owners, directors and officers.
- Provide disclosures about control persons. As part of the application, all individuals identified as control persons must disclose if they had pled no contest to, or been convicted of or found guilty of, or are currently under investigation for fraud, state or federal securities violation, property-based offense, or a crime involving moral turpitude or dishonest dealing, in which case the application will be denied. Other disclosures include any history of unpaid liens, outstanding judgments, or other general history of nonpayment of debts, including, any bankruptcies within the past 7 calendar years.
- An applicant must provide the maximum number of consumers for which it will make its innovative product or service available. The number is initially capped at 15,000 consumers, but it can be increased to 25,000, after the applicant submits its semi-annual report.
- A proposed draft of a required consumer disclosure to be provided to consumers. The draft must include all technical details.
- Business plan with market analysis, financial projections, and pro forma financial statements.
The Office of Financial Regulation is required to approve or deny the Sandbox License application within 60 days after filling. The application review period may be extended upon consent from the applicant. The regulator may also impose conditions on the approval of any application. If you are an innovator in the crypto and/or financial technology space who is looking to do business and get licensed in Florida or is interested in Florida Fintech and Crypto Sandbox, contact our business and crypto attorneys in Miami, Florida USA or schedule a consultation.
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